Accounting Concepts and Principles

Under this concept, the business is assumed to continue to exist for an indefinite period of time.

• Separate entity concept

• Historical cost concept

• Going concern assumption

• Prudence

Under this concept, assets are initially recorded at their acquisition cost.

• Separate entity concept

• Historical cost concept

• Going concern

• Prudence

Under this concept, the accountant observes some degree of caution when exercising judgements needed in making accounting estimates under conditions of uncertainty.

• Matching principle

• Time period

• Prudence

• Accrual basis of accounting

Under this concept, assets, liabilities, equity, income and expenses are stated in terms of a common unit of measure, which is the peso in the Philippines.

• Stable monetary unit

• Materiality concept

• Cost-benefit

• Consistency concept

It is a regulatory body that is tasked with regulating corporations, including partnerships.

• Bangko Sentral ng Pilipinas

• Securities and Exchange Commission

• Bureau of Internal Revenue

• Cooperative Development Authority

It is a fundamental qualitative characteristics that has the ability to affect decision making of the users.

• Confirmatory value

• Verifiability

• Comparability

• Relevance

It is an element of faithful representation that says information must be presented with sufficient detail necessary for users to understand them.

• Confirmatory value

• Neutrality

• Completeness

• Materiality

Which of the following is not an enhancing qualitative characteristic?

• Comparability

• Timeliness

• Confirmatory value

• Verifiability

It is an enhancing qualitative characteristic that says information must be provided to users on time to be capable of influencing their decisions.

• Comparability

• Verifiability

• Timeliness

• Understandability

On Day 1, a customer buys goods from Entity A and promises to pay the sale price on Day 30. Entity A recognizes sales revenue on Day 1 rather than on Day 30. This is an application of which of the following accounting concepts?

• Prudence

• Accrual basis

• Consistency

• Materiality